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IBERIAN DAILY 14 OCTOBER + 3Q’21 RESULTS. PREVIEWS (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ELECTRICITY SECTOR, PROSEGUR, SACYR, TÉCNICAS REUNIDAS, TELEFÓNICA.

MARKETS YESTERDAY AND TODAY

At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 3Q’21 results to be released over the coming days in Spain.

Inflation remains high and adds pressure on the implementation of the tapering
In Europe core indices rallied vs. peripheral ones, where the Ibex was the worst-performing index one day after seeing the best relative performance. In the Euro STOXX, almost all sectors ended with gains, led by Technology and Consumer Goods vs. the drops of Banks and Insurance. On the macro side, Spain presented its budget with record spending and underpinned by a strong increase in revenues and investments in industry, technology, infrastructures and tourism. In the euro zone and in the UK, August’s industrial output climbed in YoY terms above expectations. Separately, Brussels offered the UK to reduce Northern Ireland border control to ease trade problems. In the US, September’s inflation climbed slightly more than expected to 5.4% YoY while the core data remained at 4.0% YoY, as expected. The Fed minutes ratify the idea of the tapering before the end of the year (ending by mid 2022) with an initial reduction of purchases of US$ 15 Bn (€ 10 Bn in public debt and € 5 Bn in MBS) while several members continue to bet on low rates for at least a couple of years despite the long-lasting transitional nature of the high inflation. In China, September’s inflation moderated unexpected while production prices climbed more than expected. In US Results, the season kicked off to a good start with the positive surprises of BlackRock, JP Morgan, First Republic and Delta Air Lines.
What we expect for today
European stock markets would open with gains of 0.5%. Currently, S&P futures are up +0.4% (the S&P 500 ended +0.5% above its price at the closing bell in Europe). Volatility in the US fell (VIX 18.64). Asian markets are trading with mixed results (China’s CSI 300 -0.4% and Japan’s Nikkei +1.25%).
Today, in Spain we will learn September’s core inflation and in the US September’s production prices and weekly jobless claims, In the US, Bank of America, US Bancorp, Morgan Stanley, Citigroup and Domino´s Pizza, among others, will release their earnings. In debt auctions: Ireland (€ 1.5 Bn in bonds due 2031, 2045 and 2050).